Key Points
- Market fears arise from the potential of a $9B Bitcoin sell-off by Mt. Gox.
- Fewer coins sold than expected, thus less damage caused
- There seems to be enough liquidity going by Bitcoin’s daily trading volume
- Bitcoin prices are also being affected by wider economic issues
Mt. Gox, once the biggest Bitcoin exchange worldwide, is about to return around $9 billion worth of Bitcoin to its creditors. Many people are speculating how this huge sale might affect the market.
According to John Glover, Chief Investment Officer at crypto lending firm Ledn, there will be many claimants who cash out and turn their long wait into huge gains.
“Clearly many people will want to cash out and enjoy what may be their best-ever investment – having had money stuck in MtGox for years,” he told CNBC.
James Butterfill, Head of Research at CoinShares also said that investors were worried about when it would happen because they are very sensitive right now after trusting other companies not too long ago only to see prices change dramatically after they returned large amounts of bitcoins into circulation like how Gemini gave over 2 billion dollars’ worth last month alone.
Will Mt. Gox Really Dump $9B In Bitcoin On The Market? $BTC https://t.co/WfzJLgqP3y via @Benzinga
— RepostWizz (@RepostWizz) July 1, 2024
Market Dynamics and Expert Predictions
“Many early users of MtGox are still active in the crypto ecosystem today – including myself,” said Lennix Lai, Chief Commercial Officer at OKX. “These bitcoin OGs (original gangsters) are unlikely to be phased by these events.”
However, according to Jacob Joseph from CCDATA’s research team along with Galaxy Digital’s head researcher Alex Thorn, both expect fewer coins to be sold compared to initial predictions.
Even if just 10% were sold that would have some impact on markets given the time frame which takes a while for all distributed ones to be traded off so the overall effect might be softened due to more gradual sales said Thorn.
Vijay Ayyar, Gemini’s Head of APAC Institutional Business suggested that the impact could be spread over time because of a diverse range of recipients which would result in less immediate selling pressure.
Butterfill said investors need not worry about this affecting too much volume as $8.74bn worth gets traded on trusted exchanges each day- meaning there should be enough liquidity for any potential mass sell-offs to absorb without causing further panic among traders.
Who are still shaken up from recent events where other firms dumped large amounts back into circulation only causing prices to change dramatically once again like with what happened following Gemini giving more than 2 billion dollars worth last month alone.
Broader Economic Influences
However, events at Mt. Gox aren’t the only things influencing Bitcoin’s price as it has gone down after flowing out from ETFs and major market liquidations were done; besides that revised rates by Federal Reserve leave many worried thus Butterfill hinted rate cuts set by Fed during traditionally low volume summer months might have been behind recent drops but added “the fundamental investment case remains very much intact.”
With the market going through turbulent times, the Benzinga Future of Digital Assets event slated for November 19 will shed more light on these developments and reveal what lies ahead for digital assets in general thereby providing insights that can help players better position themselves within this dynamic environment.
